Why cuts into vinyl covers?

Interesting read but many different takes. More confused  than ever.

I can imagine your getting confused here as there is some misinformation. 
A cut out is not a store play copy but overstock that is sold in bulk at a low price to resell to stores. The mob pretty much controlled this business to the extent I worked in a store in NYC (owner by some guys that worked at Strawberry’s, Morris Levy's Boston chain) that had set up an operation to press cut outs. In other words, bootleg the remaindered records as once it was a cut out no one noticed if someone was making more of them. Since some of them sold pretty well it was like printing money. Cut outs are cut so they can’t be returned to the distributor.

Records that also have a cut, or a hole punched through the bar code are promos or store play copies. These are indeed the first albums off the stampers and can sound better then those from later in the run. 
In the old days stampers would press 15,000 copies before a new set was made from a mother. These days they rarely press more then 3000 before replacement. In the old days also way overstocked records would be ‘reground’ that’s is melted back into being vinyl ‘pucks’ to make new records from. When they did this the labels were not removed. After 30 years or so of regrounding vinyl things were getting pretty noisy. 

Thanks a lot. So from now on, for best sound I should look for holes punched, side cuts or promo stamps or labels and forget about the corner cut offs.
Got it.

I never looked for hole punched records to find early pressings- I usually looked for white label promos or went by the matrices in the dead wax. 
@yaluaka- I don't think I disagree with anything you wrote- I'm aware of one distributor who will go unnamed that was known for releasing counterfeit copies of records they otherwise had legitimate copies of, either as cut outs or as normal distribution copies. The other thing I was aware of was so-called 'back-dooring' by less scrupulous pressing plants-- pressing more records than called for by the label which was basically unaccounted for inventory that got sold without the involvement of the label and without paying the artists. 

The first time I came across this in Chicago, occurred right at the point in time where the record industry was breathing it last breath. All of the record retailers were heavily discounting almost all of their inventory to dispose of everything. I guess you could say it was like "the mark of Cain"
"Be gone you foul LP's and make way for tomorrows technology ". And look where we are now. Who would have thought it. 
I took advantage of all the LP's I could afford at the time, as long as the contents were untouched. I really didn't care about the album covers. Every once so often I go to used LP shows (so to speak). But surprisingly, I rarely see any punched or cut album covers. I guess the practice wasn't as wide spread as  some might think. I'm not certain what effect the "marks" might have on resale value. Frankly, I am only concerned about the content, and not the container. I don't think you will have to worry about any dealers punching holes in CD packaging, when they are finally on their way out. Just a thought